once in a while the capitalist system requires a fire, a crisis, to
shake it and get rid of the bad fruits, the reckless, and to reward the
prudent. But when the crisis rewards the reckless bankers and punishes
the rest of society, then a political crisis of legitimacy emanates, and
there will be a face-off between economic and political elites, if such
a distinction is indeed true.

the capitalist economic system has a central weakness in the concept of 'limited
liability' for corporations.
so anyone who buys into a corporation has no real responsibility toward
the harm that the corporation might do. the profits and losses can be
enjoyed by anyone who invests, but the non-financial harm caused is
borne by others.

'limited liability' is therefore a political tool not an economic one.
it distorts markets because it removes the natural link between 'cause'
and 'effect' within economic, social, environmental and political
relations.

the company that i manage may make many homeless, engage in slave
labour, benefit from gender disparities, destroy the environment or
profit from causing war, but this will have no implications for me. i
will simply benefit or lose depending on how much profit the company
makes.

doing away with the notion of limited liability would make economic
activity far riskier, as it would make liability a natural part of the
process. as it should be. but instead, the liability is pushed back on
consumers, shareholders and taxpayers rather than those who make
corporate decisions.

so the moral imperatives that inform and guide most human interactions
are reduced to a single axiom in capitalist economic relations: making
profit 'good', losses 'bad'. nothing else matters much, and
the state, its laws and its monopoly on coercive power will be designed
to protect this limited liability for the sake of continued
and competitive economic growth; thus creating 'the Wealth of Nations'.

but when the wealth of a whole nation is put at risk for the benefit of
individual managers of corporations, the system becomes subverted, and a
political crisis ensues, as is the case in both usa and europe today.
heads of corporations refuse to accept the principles of liability or
accountability, will continue to enrich themselves through massive
bonuses, betting on risks and dishonest marketing of derivatives etc.
while shareholders will pay through losing their share value, and
'austerity measures' are paid for by ordinary citizens.

the wealth of the nation becomes second priority against the wealth of
corporate management.

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the global financial elite were the main cause of the recent crisis, but
they seem to have escaped any consequences for themselves while
millions of people have lost their homes, jobs, pensions and savings.

in both the us and europe there is a serious crisis of legitimacy that
must be tackled or there may be consequences for the regimes in place.
this explains for example obama's current efforts to confront Wall Street. it
is a show of the political elite taking on the economic elite, and in
the process trying to regain some legitimacy for the system.

in europe, a similar situation has gone as far as challenging the
union's legitimacy.

regardless, we are at a historical crossroads with several possible
scenarios.

markets essentially are political inventions. the lack of a political
will to fix the challenge to the system coming from corporate greed at
the expense of the wealth of nations (after almost two years since the
current crisis broke) bodes ill for the West and it's geopolitical
future.

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while many have obsessed with 'regime change' in Iran for the past few
decades, there is a real likelihood of a regime collapse in the west
unless some serious measures are undertaken to resolve the current
crisis of legitimacy.

http://niloufarparsi.wordpress.com

An average Iranian with a keen interest in international affairs. Niloufar is a graduate in Development Studies in the UK, and works as an international consultant in the field of international development (non-profit).